Prices for farm land reached all time highs in the first half of 2011 due to strong demand but the availability of land is slowing down the pace of growth according to the farm land survey results from the RICS. The demand is mainly due to commercial farmers being keen to expand production. Residential farmers demand didn't change much over the same period.
The 'transaction' based measure increased by 6% to £7,479/acre and the 'opinion' based measure increased by 5% to £6,115/acre. The growth rate has slowed down since H2 2010 but both measures are at all time highs.
Surveyors are suggesting that the farm land market is experiencing the same sort of subdued activity seen in the broader housing market. Commercial farmers however want to capitalise on higher commodity prices and therefore expand production.
Bare farmland prices increased in most regions but the strongest price increases were in the North East where prices were up by 14% and the East Midlands were they were up 10%. At the end of 2011 the most expensive land was in the North West where prices reached £6,938/acre, the cheapest was Scotland at £3,813/acre.
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